Broker Check

The Weekly Wealth Report

January 03, 2022
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The Week on Wall Street


Stocks closed out the year on a mostly positive note, adding to the year’s gains as concerns about the economic issues of Omicron infections receded.
The Dow Jones Industrial Average rose 1.08%, while the S&P 500 picked up 0.85%. The Nasdaq Composite index was flat (-0.05%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, posted an increase of 0.80%.


FACT OF THE WEEK

Love cats? Or not? Either way, here are some interesting facts about our feline friends:


• When cats climb a tree, they can't go back down head first. This is because their claws are facing the same way, instead, they have to go back down backward.
• Your cat not only rubs their head against you as a sign of affection, but they are also marking you as their territory. They use the scent glands they have around their face, the base of their tails, and their paws to do so. 
• Cats can't taste sweetness. Scientists believe it's due to a genetic mutation that affects key taste receptors. 
• Europe introduced cats into the Americas as a form of pest control in the 1750s.
• Cats can make more than 100 different sounds. • There are 473 taste buds on a cat's tongue.
• Cats only meow as a way to communicate with humans. 
• Cats and humans have nearly identical sections of the brain that control emotions.
• Cats can recognize your voice. So yes, they are just ignoring you.  

MARKET MINUTE

Stocks Notch Record Highs

The end of the year is historically a strong period for stocks - a seasonal pattern dubbed “The Santa Claus Rally.” This year’s final week of trading did not disappoint as stocks posted healthy gains to kick off the week, despite a global increase in Omicron infections. Investors were buoyed by data that showed fewer associated hospitalizations, which helped ease fears of the variant’s economic impact.

The S&P 500 set multiple fresh record highs, with Wednesday’s new high representing the 70th such high in 2021, while the Dow Industrials recorded its first new record since November. Stocks drifted on low trading volume in the final two trading days of the year, capping a good week, a solid month, and a strong year for investors.

Robust Holiday Sales

The market got off to a good start last week in part due to a strong holiday sales report. A major credit card issuer reported that consumer holiday spending rose 8.5% from last year’s levels, driven by an 11.0% gain in online sales. It was the biggest annual increase in 17 years. The spending by consumers exceeded pre-pandemic sales by 10.7%. The retail categories that experienced the highest sales increases were apparel (+47.3%) and jewelry (+32.0%).

It was a particularly robust number in view of investor concerns about supply chain disruptions, port congestion, labor shortages, and wavering consumer confidence.

FINANCIAL STRATEGY OF THE WEEK

If there was a "money word of the year" for 2021, it would be inflation. In November, the Consumer Price Index (which tracks the average cost of things like food, housing, and transportation costs) increased 6.8% year-over-year, the fastest rise since 1982.

Can we leave inflation in 2021?

While no one knows for sure, many experts predict inflation will keep going strong through at least the first half of 2022. That's thanks to the likelihood that supply-chain disruptions and product and worker shortages continue, and push prices upward. (Reminder: low supply + high demand = rising prices.)

Sounds rough on my wallet.

Yeah, not great. If your budget is based on old price tags and habits, hit refresh. Make a new spending plan according to your current priorities and needs, plus some cushion for higher prices. Don't forget to add in short-term savings and long-term goals, like retirement. If there's not enough money to go around – or you want more to spend on your goals or fun stuff – it's time to create more wiggle room.

How do I make more room in my budget?

Some ideas to get you started:

Comparison shop.

Swapping the name brand for a store brand could save you an average of 25%. Check out tools like Basket and MyGroceryDeals.com to look up in-store and online prices before you start shopping.

Check out smarter.

How you pay matters. If you spend a lot on certain categories like gas, restaurants or groceries, consider opening a rewards card that gives you points or cash back. Some offer as much as 5% back in certain spending categories. Be sure to stick to your budget so you can pay your entire balance each month and avoid accruing more money in interest than you got from card benefits. For other spending, using cash could save you. Studies show that handing over cash stings more than swiping plastic, so you're less likely to overspend.

Reduce and reuse.

Think of ways to pare down your regular spending. Think: using what's in your freezer or pantry before going back to the store. Or instituting a ‘one-in, one-out’ rule. You can also repurpose what you already have. Try repainting old furniture to match your current style and having old clothes mended or altered vs. buying new. If you have items you definitely can't use anymore, sell them on secondhand marketplaces like eBay or Poshmark.

Bulk up.

Buying more upfront could cut your bill by up to 25% on certain items. Non-perishables like paper towels, freezer bags, batteries, and peanut butter can all offer big savings without the risk of spoiling. Pro tip: check the per-unit price vs. the sticker price to see whether a bulk deal is really worth it.

Cut a subscription (or two).

There’s probably at least one subscription you signed up for and forgot about. Whether that's a premium cable channel, shipping service or phone app, go ahead and cancel. You weren't using it anyway.

Negotiate your bills.

What you pay for your phone bill, cable, and Internet are all up for discussion. Check out competitor deals, then call your service provider and ask if they can match (or beat) it. Don’t be afraid to push back or ask for a supervisor if the first person you talk to can’t help, but remain calm and polite. If you have a big medical bill, talk to the hospital or your doctor's office about an interest-free payment plan and/or discounts for a lump-sum payment.

Mind your utilities.

Rising energy costs are set to crank up your utility bills. Try turning down your thermostat during off-peak hours. You can trim about 1% off your annual electric bill for every one degree you lower the temp over an eight-hour period (like the time you're sleeping). Setting your fridge to 38 degrees and your freezer between 0–5 degrees will also help keep food fresh while keeping your energy bill in check. Keeping your water heater to 120 degrees can save up to $61 per year.

Save at the pump.

Gas prices recently hit a seven-year high. And not everyone can afford to go hybrid. An app like GasBuddy can help you find the cheapest gas around. Keeping your tires properly inflated and driving at a steady speed can also help you burn through less fuel.

Prices have been going up, up, up. And the trend will continue into mid-2022. That might mean your budget needs an overhaul. Cutting unnecessary expenses, negotiating regular bills, and being mindful about energy usage at home could add up to a lot more savings. As always, feel free to contact us with any questions.

Have a great week!